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June 21, 2012

It’s Not All About Price When Buying a Home

SNI's Philosophy

Jeff Cochran

1

A little while back, a member of SNI purchased a new condo. The market in this particular area had continued to be hot through the recession and as a result it was very likely there were going to be multiple offers on the property. While most potential bidders tried to take advantage of time with the seller to express why they were such great candidates for the condo, this member used the time very differently.

He told the story like this: When I went in to speak with the seller, I didn’t do much speaking about myself. I sat with the owner and her fiancée and just asked and listened – why are you selling the apartment? Where are you moving to and why? What is important to you in this transaction? What else? What else? What is most important and why? It turned out they had bought an expensive house with the intention of making a few modifications but they got carried away and had started a full renovation. As a result, the house was going to take substantially longer to return to livable condition and the couple was unsure as to what they should and would do in the meantime.

When it came time to submitting offers, I extended the close date by several months and added a note about being flexible in order to let them settle in to their new home. I was not in a hurry to move, I just wanted the right place at the right price. Knowing they had been slightly over their heads with the renovation and wanted to ensure the sale would go through, I included a substantially larger than average deposit with the total bid that was about 5% lower than what I expected to be the highest bid. I also included a note about my two apartments that offered short term leases at reasonable prices – friends of mine had used them in the past and raved about the value. It turned out my bid was about 4% lower but I still came away with the best property I had seen in over 6 months of searching.

Like in many other situations, the price was important, but it’s wasn’t everything. Ask the right questions, figure out what is important to the other side, and find a way to give it to them. In order to get what you want (the condo at a good price) you have to give them what they want (a reasonable price, a sense of security, a later close date, and help figuring out their living situation).

COMMENTS (1)
  • I totally agree with you. It is never just about the price, it is always about what you get for the price. It is an excellent approach to get closer to the underlying interests of the seller, especially on something as important for both parties. I remember using this approach when we bought out current house in the UK. We agreed the price, and I made a conscious effort to keep close to the sellers before the deal wa done, knowing that there is still plenty that can go wrong and there is a lot still to negotiate. During the next 3 months we lost our buyer, their purchase fell through, and all sorts of little problems arose. Because we had a goor relationship and trusted each other we gave each other time to iron things out and ensure we could close the deal. if we had just had an arm wrestle on price and left it at that i am sure the deal would have fallen through.

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